Genesis Electronics Group, Inc. - FORM 10-K/A

Attached files

file	filename
EX-31.1 - CEO 302 CERTIFICATION - Genesis Electronics Group, Inc.	genesis10k09ex31-1am1.txt
EX-31.2 - CFO 302 CERTIFICATION - Genesis Electronics Group, Inc.	genesis10k09ex31-2am1.txt
EX-32.1 - CEO 906 CERTIFICATION - Genesis Electronics Group, Inc.	genesis10k09ex32-1am1.txt
EX-32.2 - CFO 906 CERTIFICATION - Genesis Electronics Group, Inc.	genesis10k09ex32-2am1.txt

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K/A

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______TO _______

Commission file number: 0-50773

Genesis Electronics Group, Inc.
(Name of registrant as specified in its charter)

Nevada 41-2137356
(State or other jurisdiction of (I.R.S. Employers
incorporation or organization) Identification No.)

5555 Hollywood Blvd, Suite 303, Hollywood, FL 33021
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (954) 272-1200

Securities registered under Section 12(b) of the Act:

Title of each class Name of each exchange on which registered.
Not applicable

Securities registered under Section 12(g) of the Act:

Common stock, par value $0.001
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
[ ] Yes [x] No

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes [x] No

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to

Rule 405 of Regulation S-T (section 232.406 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company:

Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [x]

State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and asked prices
of such common equity, as of the last business day of the registrant's
most recently completed second fiscal quarter. $7,764,116 on June 30,
2009.

Indicated the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
153,491,906 shares of common stock are issued and outstanding as of
March 31, 2010.

DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders;
(2) Any proxy or information statement; and (3) Any prospectus filed
pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The
listed documents should be clearly described for identification
purposes (e.g., annual report to security holders for fiscal year ended
December 24, 1980). None.

EXPLANATION OF AMENDMENT

We are filing this amendment, in part due to the PCAOB revocation of
the registrant's prior auditor, Larry O'Donnell & Co., CPA, P.C. and
the subsequent re-audit of the consolidated financial statements for
the years ended December 31, 2010 and 2009. This amended report does
not reflect events occurring after the original filing of the Form 10-K
on April 15, 2010.

TABLE OF CONTENTS

Page No.
Part I
Item 1. Business 4
Item 1A. Risk Factors 10
Item 1B. Unresolved Staff Comments 10
Item 2. Properties 11
Item 3. Legal Proceedings 11
Item 4. (Removed and Reserved) 11

Part II
Item 5. Market for Registrant's Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities. 12
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operation 13
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 22
Item 8. Financial Statements and Supplementary Data 23
Item 9. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure. 53
Item 9A Controls and Procedures. 53
Item 9B. Other Information. 55

Part III
Item 10. Directors, Executive Officers and Corporate
Governance 56
Item 11. Executive Compensation 58
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters 60
Item 13. Certain Relationships and Related Transactions,
and Director Independence 61
Item 14. Principal Accountant Fees and Services. 61

Part IV
Item 15. Exhibits, Financial Statement Schedules. 63

4
PART I

ITEM 1. BUSINESS.

Overview
--------
The registrant was originally incorporated in the State of Nevada on
March 19, 1998 under the name Business Advantage No. 22, Inc. Due to
non-filing of annual reports, the corporate charter of Business
Advantage No. 22, Inc. was revoked. In June 2004, Business Advantage
No. 22, Inc. was reinstated. On June 4, 2004, Business Advantage No.
22, Inc. entered into an Agreement and Plan of Reorganization with
Pricester.com, Inc., a Florida Corporation to merge Pricester Florida
into Business Advantage No. 22, Inc. On June 4, 2004, in anticipation
of the merger, the name of Business Advantage No. 22, Inc. was changed
to Pricester.com, Inc.

On February 9, 2005, pursuant to Articles of Merger, shareholders of
Pricester Florida received 21,262,250 common shares of Business
Advantage No. 22, Inc. on a basis of a one for one exchange for their
common shares. Pricester.com, Inc., formerly Business Advantage No.
22, Inc., was the surviving corporation. The articles of merger were
filed with the states of Nevada and Florida. The number of common
shares held by Pricester Nevada before the merger was 1,044,620.

Pricester Nevada was the acquirer for legal purposes and Pricester
Florida was the acquirer for accounting purposes. The transaction was
accounted for as a reverse acquisition.

Prior to the merger with Pricester Florida on February 9, 2005,
Pricester Nevada had no significant operations and had no control over
the operations of Pricester Florida.

Pursuant to Articles of Amendment filed on February 24, 2009, the name
of the registrant was changed to Genesis Electronics Group, Inc.

Subsidiary
----------
On May 22, 2008, we completed a share exchange with Genesis
Electronics, Inc., a Delaware corporation. Pursuant to the Acquisition
Agreement, we acquired all of the outstanding common shares of Genesis
Electronics, Inc. and it became our wholly-owned subsidiary.

Genesis Electronics, Inc. was originally formed in Delaware on October
22, 2001 and is engaged on the development of solar and alternative
energy applications for consumer devices such as mobile phones.

Corporate operations
--------------------
The registrant's business consist of
(1) Genesis Electronics: the development and eventual manufacturing
and marketing of solar-powered consumer products, based on patented
technology either owned by Genesis or licensed from Johns Hopkins
University Applied Physics Laboratories,
(2) Pricester.com: the sales of cost-effective websites and related
Internet services primarily to the small business sector, and

(3) Copia World, a Division of Pricester.com: the development and
marketing of an international shopping portal. We have yet to generate
substantial revenue because we are still in the developmental and pre-
production stages with our solar products, although substantial headway
has been made with successfully operating prototypes designed to comply
with the standards of a major brand-name manufacturer, and our website
and international shopping portal businesses have not yet reached
sufficient volume to be self-supporting.

We have suspended operation of the Pricester.com Shopping Portal, which
enabled users to build their own websites and sell and auction their
goods directly through the portal. The Pricester.com Shopping Portal
represented less than 10% of the Pricester.com division.

As soon as our first solar-powered product, a charger for a brand-name
iphone, is fully compliant with all necessary and elected technical
criteria, we will be able to move ahead with manufacturing and
marketing the product, as well as the development and marketing of
similar products designed for operation with other hand-held and
portable electronic devices. The registrant has already formed an
ongoing partnership with a Taiwan-based manufacturer and strides have
been made in product and packaging development, procurement of safety
and transport certifications, prototype production and setting up for
planned mass-production. There are no written agreements between the
parties.

With the worldwide proliferation of cell phones, smart phones, notebook
computers, and so many other portable electronic devices, the
widespread and growing problem of inadequate charging life from
traditional batteries, the inconvenience and sometimes unavailability,
of re-charging by plugging into a wall outlet, management is of the
opinion that there is a need for a more sustainable source for
charging. Genesis Electronics' fully-functional early prototypes have
met with positive reception from prospective distributors, sales
organizations and large scale retailers from both concept and
operational standpoints.

Concerning Pricester.com's business, we have developed a technological
framework that overcomes prohibitive cost factors and exponentially
increases the ease with which small business owners can effectively
enter the e-commerce community and credibly compete for customers
online.

We have created streamlined processes that permit an economy for the
construction of professionally designed, customized, full-functioned e-
commerce or informational websites, and for hosting large numbers of
such websites. Our services are marketed to the small business sector,
where the cost of website design and development has been a barrier to
achieving an Internet presence.

As consumer access to the Internet has become more widespread and
continues to grow, management is of the opinion that websites have
emerged as an essential tool for small businesses. Small companies and
professional practices alike understand the value of a website for
establishing credibility and competing for clients and sales.

Concerning Copia World's business, we have launched an international
shopping portal, now populated with direct website links to over 7,000
stores covering 15 shopping categories in 25 countries.
In addition, the portal also includes a robust travel booking engine in
affiliation with a prominent online provider for airfare, hotel
accommodations and car rental. Copia World offers consumers and
travelers access to international shopping available anywhere on the
Internet from a single source. The website, www.copiaworld.com, is
already ranked by Google and other major search engines for search
terms such as "international shopping mall" and "international
shopping".

Revenue is planned to be derived from paid advertising, gradually
replacing PPC ads and potential partnerships with synergistic companies
such as international hotel chains and major credit card providers.

Our Products & Services
-----------------------
Overview: The registrant is in the developmental stage of producing and
marketing solar-powered consumer products. The registrant also
provides services that allow small businesses to have a cost-effective
Internet presence with the website features that consumers want and
expect. Additionally, the registrant has built and operates an online
international shopping portal, useful for travel planning and online
purchasing on a global scale.

1. Genesis Electronics: Genesis Electronics, a wholly-owned
subsidiary of the registrant, is engaged in the development and
marketing of solutions. Battery life and charging technology
reliability are currently being examined by Genesis Electronics,
especially where the usage is expanded beyond simple voice
communications to Internet access, games, video viewing, audio-visual
recording and thousands of downloadable applications.

Genesis Electronics has developed a patent-based solar energy
technology that makes a constant and reliable charge always available
to cell phones or smart phone batteries.

Our board of directors feels that the potential for its patented
technology and the products and applications that may be developed in
the future can represent significant revenue for the registrant. The
registrant has no definite timeline for the development of these
products and applications. The technology can be adapted to any mobile
electronic device, including cell phones, "smart" phones, mp3 players,
notebook and laptop computers, digital cameras, etc. Additionally,
applications for use with electronic devices employed by the military
are being investigated. The registrant has verbal commitments for

production and distribution channels are already in place for smart
phone application with companies such as Comm Tec, Inc., a Taiwan-based
manufacturer.

2. Pricester.com: Pricester.com, a division of Genesis Electronics
Group, provides website design services, primarily geared to the needs
and budgets of small businesses. Closely related Internet and website
services also provided by Pricester include: website hosting, domain
registration, Internet search engine and directory submission, Internet
marketing services (e.g., webpage optimization, pay-per- click campaign
development, etc.), website maintenance, design-related services such
as logo creation, and advanced shopping cart and design options for
highly customized websites.

While virtually all major retailers and service providers have company
websites, the smaller owner-operated businesses-collectively, the
largest component of the entire economy-still only have a relatively
minor presence on the Internet. There are over 23 million small
businesses in the U.S., including businesses with less than 5 employees
and those filing 1040 Schedule C returns (Source: U.S. Department of
Commerce) and millions still without a web presence to sell and promote
their products and services. According to a 2009 report by Ad-Ology
Research, an authoritative source used by over 2,000 advertising
agencies, media properties and corporate marketing departments, a full
46% of small businesses do not have a website.

Our website design technology permits the professional customization of
websites at extremely low cost. The savings are passed along to the
business owner, resulting in perhaps the lowest net cost customized
website package available on the market today. Competitors offering
similar services are operating within a far more labor intensive
environment and cannot compete with Pricester.com's pricing strategy.

Clients receive a customized multi-page website designed for free and
agree to pay just a competitive Internet hosting fee and a nominal set-
up charge. At this time, Pricester.com creates the majority of its
sales by generating small business leads using outbound automated
telemarketing, and then following up by telephone. A number of sales
are also the result of client referrals and repeat clients. Almost
all sales are consummated over the phone.

Concurrently, the registrant is endeavoring to develop strategic
partnerships with other companies and organizations that have an
interest in the same small business target market. Pricester.com
delivers a product that is appealing and important to small business
owners. Therefore, logical targets for strategic partnerships are
larger corporations, such as mid to large banks, merchant service
providers, communications companies, appropriate retail chains and
business organizations that actively and competitively seek to acquire
and retain small businesses as their customers or members.
Pricester.com's website service is positioned as a valuable addition to
the partner's existing product or service, providing more market
differentiation and a competitive edge.

The market for affordable business websites is large and still
expanding. Pricester.com's services are specifically geared to address
this demand from the small business sector. Additional funding is
required to expand marketing efforts in order to reach and further
penetrate the market.

3. Copia World: Copia World, www.copiaworld.com, a division of
Pricester.com, is an online shopping portal of international scope, a
more comprehensive, consumer-friendly, single-source of retailers and
select service providers on an international level.

Copia World provides travelers and consumers with fast access to
retailers and businesses worldwide. Currently, the portal includes 25
countries spanning six continents, with 15 major shopping categories
including a powerful travel reservation engine and over 7,000 store
listings. Copia World features ease of use and direct links to all
listed business websites.

Copia World has already achieved major search engine ranking for
relevant terms such as "international shopping mall" (recently ranked
#1 on Google and #4 on Bing, in both cases out of over 24 million
matches) and "international shopping" (consistently a top 5 rank).

Visitors can shop for
- clothing in London,
- wines or jewelry in Paris,
- hand-crafted items from Mexico,
- furs in Moscow, view real estate in Saudi Arabia,
- peruse the department stores in Brazil,
- see the offerings from shopping malls in Israel,
- compare banks in Germany.

The portal currently displays affiliate ads and is moving towards
generating added revenues through subscription advertising from listed
companies. The board of directors feels that there is potential for
Copia World as the portal continues to grow in population and enhanced
features are added. Additionally, corporate partners for Copia World
are being sought.

COSTS OF OPERATION

In order to operate the above businesses, continue to develop our
products and provide our services, the registrant currently employs
personnel for management, technical development and coordination,
customer support, technical support, Internet marketing and web design
and contract for sales personnel. Our regular monthly expenses are
approximately $14,080, broken down as follows:

Payroll & Taxes $6,400
Rent 1,580
Electric 300
Telecommunications (Phones & Servers) 1,500

Accounting services 2,500
Insurance 300
Legal 1,500
-------
$14,080
=======

REVENUE STREAMS

The registrant has not generated significant revenues.
Currently, revenue is generated solely through the Pricester.com
division, as Genesis Electronics and Copia World are still in their
early stages. During 2006, Pricester.com commenced selling Website
design services and hosting plans. As the number of clients increase
and budgeting permits adequate marketing expenditures our revenues
should increase significantly with collected setup fees and monthly
hosting fees.

Our revenues have been generated by website sales, hosting fees and
miscellaneous service fees totaling $78,797 for the year ended December
31, 2009.

In order to successfully expand our number of clients for our website
development and hosting services, we must employ significant monetary
resources.

Intellectual Property and Proprietary Rights
--------------------------------------------
We protect our intellectual property through existing laws and
regulations and by contractual restrictions. We attempt to protect our
technology and trade secrets through the use of: confidentiality and
non-disclosure agreements, trademarks, patents, and by other security
measures.

The registrant owns a patent for a solar rechargeable battery (U.S.
patent 6,586,906) and licenses two additional patents from Johns
Hopkins University Applied Physics Laboratories for an "Integrated
Power Source" (U.S. Patents 5,644,207 and 6,608,464).Trademarks have
been filed under Pricester.com and Pricester Store "e-commerce for
all". The Copia World spinning globe icon is trademarked.

Marketing Strategies
--------------------
We intend to establish a national market presence, and where
appropriate an international presence, using the following approaches
in order to gain brand awareness and sales for all of our businesses:
public relations and advertising campaigns using television, radio,
press releases, Internet marketing, and targeted newspapers and
magazines

Insurance
---------
We have in force workman's comp and general liability insurance.

Competition
-----------
Genesis Electronics competes with other manufacturers of solar powered
and traditionally powered charging devices. Pricester.com competes
with many website design and Internet hosting companies. Copia World
competes with established shopping and travel websites. In all cases,
many of these competitors may have advantages in expertise, brand
recognition, available financial and other resources, and other
factors.

In order to compete effectively, we will need to expend significant
capital, internal engineering resources, or acquire other technologies
and companies to provide or enhance our capabilities.

Government Regulation
---------------------
We are subject to general business regulations and laws, as well as
regulations and laws directly applicable to the production and
transport of electronic devices (applicable to Genesis Electronics),
and the Internet (applicable to Pricester.com and Copia World). As we
continue to expand the scope of our product and service offerings, the
application of existing laws and regulations relating to issues such as
consumer protection, content regulation, quality of products and
services, and intellectual property ownership and infringement can be
unclear. In addition, we will also be subject to new laws and
regulations directly applicable to our activities. Any existing or new
legislation applicable to us could expose us to substantial liability,
including significant expenses necessary to comply with such laws and
regulations.

ITEM 1A. RISK FACTORS.

Not applicable to smaller reporting companies.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES.

We lease an office facility from 234 Hollywood, LLC pursuant to a lease
that began in October 2009. The office facility is located at 5555
Hollywood Blvd. Suite # 303 Hollywood, FL 33021. The facility
consists of 1,000 square feet for the minimum lease payments of $1,117
per month and terminated in March 2010. The lease was extended for an
additional six month period. We believe that this facility is
sufficient for our current needs. The office lease agreement has
certain escalation clauses and renewal options. If we exercise the
option to renew, the base rent shall increase by 3% per each lease
year.

ITEM 3. LEGAL PROCEEDINGS.

The registrant is not involved in any legal proceedings at this date.

ITEM 4. (REMOVED AND RESERVED)

12
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Item 5(a)
a) Market Information. The registrant began trading publicly on
the NASD Over the Counter Bulletin Board in June 2006 under the symbol
"PRCC". On December 15, 2009, the registrant began trading under the
symbol "GEGI".

The following table sets forth the range of high and low bid quotations
for the registrant's common stock as reported on the NASD Bulletin
Board. The quotations represent inter-dealer prices without retail
markup, markdown or commission, and may not necessarily represent
actual transactions.

Quarter Ended High Bid Low Bid
3/31/08 $0.32 $0.28
6/30/08 $0.19 $0.18
9/30/08 $0.042 $0.042
12/31/08 $0.04 $0.035

3/31/09 $0.18 $0.003
6/30/09 $0.097 $0.008
9/30/09 $0.05 $0.02
12/31/09 $0.04 $0.02

b) Holders. The approximate number of record holders of the
registrant is 254.

c) Dividends. Holders of the registrant's common stock are
entitled to receive such dividends as may be declared by its board of
directors. No dividends on the registrant's common stock have ever bee
paid, and the registrant does not anticipate that dividends will be
paid on the common stock in the foreseeable future.

d) Securities authorized for issuance under equity compensation
plans. No securities are authorized for issuance by the registrant
under equity compensation plans.

e) Performance graph. Not applicable.

f) Sale of unregistered securities. Throughout the year ended
December 31, 2009, the registrant sold 36,486,083 common shares and
received net proceeds of $223,379 and subscription receivable of
$108,984 from the sale of 36,486,083 shares of the registrant's common
stock to non-affiliates.

Additionally, in the fourth quarter of December 31, 2009, the
registrant collected subscription receivable of $60,417 to non-
affiliates.

In May 2009, the registrant issued 4,900,000 shares of common stock to
an officer of the registrant in connection with a settlement of related
party loans of $49,000. The registrant valued these common shares at
the fair market value on the date of grant at $0.05 per share or
$245,000. The registrant has recognized interest expense of $196,000
in connection with this settlement.

Between August 2009 and September 2009, the registrant issued an
aggregate of 200,000 shares of common stock for technical advisory
services rendered. The registrant valued these common shares at the
fair value on the date of grant ranging approximately from $.03 to $.05
per share or $8,090. In connection with issuance of these shares, the
registrant recorded stock-based consulting expense of $8,090 during the
year ended December 31, 2009.

In October 2009, the registrant issued in aggregate 2,000,000 shares of
common stock to the registrant's CEO and an officer of the registrant
in connection with their employment agreements. The registrant valued
these common shares at the fair market value on the date of grant at
$.031 per share or $62,000 and has been recorded as stock-based
compensation.

In October 2009, the registrant issued in aggregate 150,000 shares of
common stock to three officers of the registrant for services rendered.
The registrant valued these common shares at the fair market value on
the date of grant at $.031 per share or $4,650 and has been recorded as
stock-based compensation.

All of the above common shares were sold to sophisticated investors
pursuant to an exemption from registration under Section 4(2) of the
Securities Act.

Item 5(b) Use of Proceeds. Not applicable.

Item 5(c) Purchases of Equity Securities by the issuer and affiliated
purchasers. None.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable to smaller reporting companies.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION

OVERVIEW
--------
Through December 31, 2005, we were a developmental stage e-commerce
company. We currently operate an e-commerce website that enables any
business to establish a fully functional online retail presence. Our
website, Pricester.com, is an Internet marketplace which allows vendors
to host their website with product and service listings and allows
consumers to search for listed products and services.

On May 22, 2008, we completed a merger with Genesis Electronics, Inc.,
a Delaware corporation. Genesis was originally formed in Delaware on
October 22, 2001 and is engaged on the development of solar and
alternative energy applications for consumer devices such as mobile
phones.

Until its acquisition of Genesis, our business was solely focused on
our internet shopping portal, and building and hosting websites for the
small business sector. While we are still engaged in this business, we
have suspended the internet shopping portal and our primary focus has
now shifted towards the further development and marketing of the above
described products.

PLAN OF OPERATIONS
------------------
We have only received minimal revenues. We do not have sufficient cash
on hand to meet funding requirements for the next twelve months.
Although we eventually intend to primarily fund general operations and
our marketing program with revenues received from the sale of the
Pricester Custom Designed Websites, hosting and transaction fees and
the sale of the solar and alternative energy applications, our revenues
are not increasing at a rate sufficient to cover our monthly expenses
in the near future. We will have to seek alternative funding through
debt or equity financing in the next twelve months that could result in
increased dilution to the shareholders. No specific terms of possible
equity or debt financing have been determined or pursued.

GOING CONCERN
-------------
As reflected in the accompanying consolidated financial statements, we
had an accumulated deficit of approximately $8.1 million, a working
capital deficit of $1,367,855, had net losses for the year ended
December 31, 2009 of $611,734 and cash used in operations during the
year ended December 31, 2009 of $221,146. While we are attempting to
increase sales, it has not been significant enough to support the
registrant's daily operations. We will attempt to raise additional
funds by way of a public or private offering. While we believe in the
viability of our strategy to improve sales volume and in our ability to
raise additional funds, there can be no assurances to that effect. Our
limited financial resources have prevented us from aggressively
advertising our products and services to achieve consumer recognition.
Our ability to continue as a going concern is dependent on our ability
to further implement our business plan and generate increased revenues.

CRITICAL ACCOUNTING POLICIES
----------------------------
Our financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United
States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses. These estimates and assumptions are
affected by management's applications of accounting policies. Critical
accounting policies for the registrant include the useful life of
property and equipment and web development costs.

Computer equipment and furniture is stated at cost less accumulated
depreciation. Depreciation is computed over the assets' estimated
useful lives (five to seven years) using straight line methods of
accounting. Maintenance costs are charged to expense as incurred while
upgrades and enhancements that result in additional functionality are
capitalized.

We review the carrying value of intangibles and other long-lived assets
for impairment at least annually or whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of long-lived assets is measured by
comparison of its carrying amount to the undiscounted cash flows that
the asset or asset group is expected to generate. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the property, if any,
exceeds its fair market value.

We have three primary revenue sources: website design, transaction
fees, and hosting fees.

- Website design revenue is recognized as earned when the website
is complete, control is transferred and the customer has accepted its
website, usually within seven days of the order.

- Transaction fee income comprises fees charged for use of credit
cards or other forms of payment in the purchase of items sold on the
customers' websites. The transaction fee income is recognized as earned
when funds transfers (via credit card or other forms of payments)
between the buyer and seller has been authorized.

- Revenues from website hosting fees are recognized when earned.
Web hosting fees received in advance are reflected as deferred revenue
on the accompanying balance sheet.

We apply ASC 605-25: Multiple Element Arrangements, to account for
revenue arrangements with multiple deliverables. ASC 605-25 addresses
certain aspects of accounting by a vendor for arrangements under which
the vendor will perform multiple revenue-generating activities. When an
arrangement involves multiple elements, the entire fee from the
arrangement is allocated to each respective element based on its
relative fair value and recognized when revenue recognition criteria

for each element are met. Fair value for each element is established
based on the sales price charged when the same element is sold
separately.

In December 2004, the Financial Accounting Standards Board, or FASB,
issued FASB ASC Topic 718: Compensation - Stock Compensation ("ASC
718"). Under ASC 718, companies are required to measure the
compensation costs of share-based compensation arrangements based on
the grant-date fair value and recognize the costs in the financial
statements over the period during which employees are required to
provide services. Share-based compensation arrangements include stock
options, restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans. Companies may
elect to apply this statement either prospectively, or on a modified
version of retrospective application under which financial statements
for prior periods are adjusted on a basis consistent with the pro forma
disclosures required for those periods under ASC 718. Upon adoption of
ASC 718, the Company elected to value employee stock options using the
Black-Scholes option valuation method that uses assumptions that relate
to the expected volatility of the Company's common stock, the expected
dividend yield of our stock, the expected life of the options and the
risk free interest rate. Such compensation amounts, if any, are
amortized over the respective vesting periods or period of service of
the option grant.

Results of Operations

Year ended December 31, 2009 compared to year ended December 31, 2008
Net sales for the year ended December 31, 2009 were $78,797 as compared
to net sales of $111,518 for the year ended December 31, 2008, a
decrease of $32,721 or approximately 29%. We are continuing to create
customer awareness for our products. The decrease in revenues is
primarily attributable to the non renewal of subscribers who had
completed their annual hosting commitment during the year ended
December 31, 2009. There can be no assurances that we will continue to
recognize similar net revenue in future periods or that we will ever
report profitable operations.

Total operating expenses for the year ended December 31, 2009 were
$490,079, a decrease of $396,685, or approximately 45%, from total
operating expenses for the year ended December 31, 2008 of $886,764.

This decrease is primarily attributable to:

- an increase of $19,124, or approximately 62%, in professional
fees incurred in connection with our SEC filings. This increase is
primarily related to increase in audit and accounting fees,

- a decrease of $191,609, or approximately 75%, in consulting fees
in connection with the issuance of our common stock for services
rendered and amortization of prepaid expense in connection with

deferred compensation in 2008. This decrease is primarily attributable
to a decrease in issuance of our common stock for services rendered
during the year ended December 31, 2009 as compared to the same period
in 2008,

- a decrease of $207,413, or 48%, in compensation expense to
$146,882 for the year ended December 31, 2009 as compared to $434,295
for the year ended December 31, 2008. Compensation expense which
includes salaries and stock based compensations to our employees.

During the year ended December 31, 2009, we issued 2,000,000 shares of
our common stock as compensation to our CEO and an officer in
connection with their employment agreements dated January 14, 2008.
During the year ended December 31, 2008, the Company issued in
aggregate 33,000,000 shares of common stock to our CEO and an officer
in connection for their services rendered. Additionally, the decrease
is also attributable to the decrease in employees,

- a decrease of $16,787, or approximately 10%, in other selling,
general and administrative expenses as a result of decrease in general
expenses and office expenses attributable to decreased spending due to
limited financial resources. We reported a loss from operations of
$411,282 for year ended December 31, 2009 as compared to a loss from
operations of $775,246 for the year ended December 31, 2008.

Total other expense for the year ended December 31, 2009 were $200,452,
a decrease of $2,100,999, from total other expense for year ended
December 31, 2008 of $2,301,451. This decrease is primarily
attributable to:

- a decrease of $852,606 in interest expense as a result of the
assumption of certain convertible debt in connection with a settlement
agreement entered into on May 23, 2008. In connection with this
settlement agreement, we recorded and deemed such debt as a convertible
liability with a fixed conversion price of $0.01. Accordingly, we
recognized a total debt discount of $1,049,717 due to a beneficial
conversion feature and such debt discount was immediately amortized to
interest expense during the year ended December 31, 2008.

- We also recognized a gain on settlement of debt of $469,284 to a
former officer of Genesis in connection with this settlement agreement
during the year ended December 31, 2008.

- a decrease of $1,717,602 in impairment expense as a result of our
acquisition of Genesis which resulted to a recognition of goodwill. We
deemed the acquired goodwill to be impaired and wrote-off the goodwill
on the acquisition date.

We reported a net loss of $611,734 or (0.00) per share for the year
ended December 31, 2009 as compared to a net loss of $3,076,697 or
$(0.05) per share for the year ended December 31, 2008.

Liquidity and Capital Resources

During the year ended December 31, 2009, we received net proceeds of
$283,796 and subscription receivable of $108,984 from the sale of our
common stock. For the year ended December 31, 2009, we collected
subscription receivable of $60,417. These funds were used for working
capital purposes.

Net cash used in operating activities for the year ended December 31,
2009 amounted to $221,146 and was primarily attributable to our net
losses of $611,734 offset by depreciation of $676, amortization of
license agreement of $8,708 stock based expense of $84,690, interest
expense of $196,000 in connection with the settlement of a related
party loan and changes in assets and liabilities of $100,514. Net cash
used in operating activities for the year ended December 31, 2008
amounted to $254,743 and was primarily attributable to our net losses
of $3,076,697 offset by stock based compensation of $341,214,
amortization of prepaid expense in connection with deferred
compensation of $187,585, depreciation of $2,524, impairment expense of
$1,717,602, interest expense of $1,049,717 in connection with the
settlement agreement and add back of gain on settlement of debt of
$469,284 and changes in assets and liabilities of $7,404.

Net cash flows used in investing activities was $10,000 for the year
ended December 31, 2009 as compared to $0 for the year ended December
31, 2008. The increase was primarily attributed to the payment on
license agreement of $10,000 in December 2009.

Net cash flows provided by financing activities was $294,896 for the
year ended December 31, 2009 as compared to net cash provided by
financing activities of $256,212 for the year ended December 31, 2008,
an increase of $38,684. For the year ended December 31, 2009, we
received proceeds from the sale of common stock and collection of
subscription receivable of $283,796, proceeds from a related party of
$18,000, offset by payments on related party advances of $6,900. Net
cash flows provided by financing activities was $256,212 for the year
ended December 31, 2008. For the year ended December 31, 2008, we
received proceeds from the sale of common stock of $340,812, proceeds
from related parties of $8,000 and offset by payments on related party
advances of $92,600.

We reported a net increase in cash for the year ended December 31, 2009
of $63,750 as compared to a net increase in cash of $1,469 for the year
ended December 31, 2008. At December 31, 2009, we had cash on hand of
$66,069.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

The following tables summarize our contractual obligations as of
December 31, 2009.

Payments Due by Period
--------------------------------------------------------
Less than 3-5 5 Years
Total 1 Year 1-3 Years Years +
----- --------- --------- ----- -------

Contractual Obligations:
Operating Lease $ 3,350 $ 3,350 $ - $ - $ -
Notes payable 15,647 15,647 - - -
Loans payable 40,000 40,000 - - -
Convertible debt 931,919 931,919 - - -
Loans payable - related
party 40,485 40,485 - - -
Accrued interest 19,051 19,051 - - -
---------- -------- -------- -------- --------
Total Contractual
Obligations: $1,050,452 $1,050,452 $ - $ - $ -

License Agreement
-----------------
In November 2009, we entered into a license agreement with Johns
Hopkins University Applied Physics Lab whereby the registrant will have
a limited exclusive license to Johns Hopkins University Applied Physics
Lab's Integrated Power Source patents. The patents are for the solar
powered cell phone and iPod chargers. We have paid $10,000 and issued 2
million shares of the registrant's common stock upon execution of this
agreement. Future license payments under the license agreement are as
follows:

Due March 1, 2010 $10,000
Due June 1, 2010 $10,000
Due September 1, 2010 $10,000
Due upon the one year anniversary of the license $125,000

Should we elect not to execute the option to an exclusive license for
the patents in advance of the one year anniversary of execution of
license agreement, the $125,000 second year anniversary execution fee
payment will be reduced to $36,000.

We shall also pay minimum annual royalty payments as defined in the
license agreement. The royalty is 6% on net sales of the product sold
using the technology under these patents. In addition, we shall pay
sales milestone payments as set forth in this license agreement. We may
terminate this agreement and the license granted herein, for any
reason, upon giving JHU/APL sixty days written notice.

Off-balance Sheet Arrangements
------------------------------
We have not entered into any other financial guarantees or other
commitments to guarantee the payment obligations of any third parties.
We have not entered into any derivative contracts that are indexed to
our shares and classified as shareholder's equity or that are not
reflected in our consolidated financial statements. Furthermore, we do
not have any retained or contingent interest in assets transferred to
an unconsolidated entity that serves as credit, liquidity or market
risk support to such entity. We do not have any variable interest in
any unconsolidated entity that provides financing, liquidity, market
risk or credit support to us or engages in leasing, hedging or research
and development services with us.

Recent Accounting Pronouncements
--------------------------------
In June 2009, the FASB issued Accounting Standards Update No. 2009-01,
"Generally Accepted Accounting Principles" (ASC Topic 105) which
establishes the FASB Accounting Standards Codification as the official
single source of authoritative U.S. generally accepted accounting
principles. All existing accounting standards are superseded. All other
accounting guidance not included in the Codification will be considered
non-authoritative. The Codification also includes all relevant
Securities and Exchange Commission guidance organized using the same
topical structure in separate sections within the Codification.

Following the Codification, the Board will not issue new standards in
the form of Statements, FASB Staff Positions or Emerging Issues Task
Force Abstracts. Instead, it will issue Accounting Standards Updates
which will serve to update the Codification, provide background
information about the guidance and provide the basis for conclusions on
the changes to the Codification.

The Codification is not intended to change GAAP, but it will change the
way GAAP is organized and presented. The Codification is effective for
our third-quarter 2009 financial statements and the principal impact on
our financial statements is limited to disclosures as all future
references to authoritative accounting literature will be referenced in
accordance with the Codification.

In April 2009, the FASB issued ASC Topic 320-10-65, "Recognition and
Presentation of Other-Than-Temporary Impairments". This update provides
guidance for allocation of charges for other-than-temporary impairments
between earnings and other comprehensive income. It also revises
subsequent accounting for other-than-temporary impairments and expands
required disclosure. The update was effective for interim and annual
periods ending after June 15, 2009. The adoption of ASC Topic 320-10-65
did not have a material impact on the results of operations and
financial condition.

The registrant's financial instruments include cash and cash
equivalents, accounts receivable, accounts payable, accrued expenses
and notes payable. At December 31, 2009 and 2008, the carrying value
of the registrant's financial instruments approximated fair value, due
to their short term nature.

In May 2009, the FASB issued (ASC Topic 855), "Subsequent Events" (ASC
Topic 855). This guidance is intended to establish general standards
of accounting for and disclosure of events that occur after the balance
sheet date but before financial statements are issued or available to
be issued. It is effective for interim and annual reporting periods
ending after June 15, 2009. The adoption of this guidance did not have
a material impact on our consolidated financial statements.

In June 2009, the FASB issued ASC Topic 810-10, "Amendments to FASB
Interpretation No. 46(R)". This updated guidance requires a
qualitative approach to identifying a controlling financial interest in
a variable interest entity, and requires ongoing assessment of whether
an entity is a VIE and whether an interest in a VIE makes the holder
the primary beneficiary of the VIE. It is effective for annual
reporting periods beginning after November 15, 2009. The adoption of
ASC Topic 810-10 did not have a material impact on the results of
operations and financial condition.

In October 2009, the FASB issued ASU No. 2009-13, "Multiple-Deliverable
Revenue Arrangements." This ASU establishes the accounting and
reporting guidance for arrangements including multiple revenue-
generating activities. This ASU provides amendments to the criteria
for separating deliverables, measuring and allocating arrangement
consideration to one or more units of accounting. The amendments in
this ASU also establish a selling price hierarchy for determining the
selling price of a deliverable. Significantly enhanced disclosures are
also required to provide information about a vendor's multiple-
deliverable revenue arrangements, including information about the
nature and terms, significant deliverables, and its performance within
arrangements. The amendments also require providing information about
the significant judgments made and changes to those judgments and about
how the application of the relative selling-price method affects the
timing or amount of revenue recognition. The amendments in this ASU
are effective prospectively for revenue arrangements entered into or
materially modified in the fiscal years beginning on or after June 15,
2010. Early application is permitted. The registrant is currently
evaluating this new ASU.

the functionality." The amendments will now subject software-enabled
products to other revenue guidance and disclosure requirements, such as
guidance surrounding revenue arrangements with multiple-deliverables.

The amendments in this ASU are effective prospectively for revenue
arrangements entered into or materially modified in the fiscal years
beginning on or after June 15, 2010. Early application is permitted.
The registrant is currently evaluating this new ASU.

In January 2010, the FASB issued ASU No. 2010-06, "Improving
Disclosures about Fair Value Measurements" an amendment to ASC Topic
820, "Fair Value Measurements and Disclosures." This amendment
requires an entity to: (i) disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value
measurements and describe the reasons for the transfers and (ii)
present separate information for Level 3 activity pertaining to gross
purchases, sales, issuances and settlements. ASU No. 2010-06 is
effective for the Company's interim and annual reporting beginning
after December 15, 2009, with one new disclosure effective after
December 15, 2010. The adoption of ASU No. 2010-06 did not have a
material impact on the Company's consolidated results of operations and
financial condition.

In July 2010, the FASB issued ASU No. 2010-20, "Receivables (Topic
310): Disclosures about the Credit Quality of Financing Receivables and
the Allowance for Credit Losses". ASU 2010-20 requires additional
disclosures about the credit quality of a company's loans and the
allowance for loan losses held against those loans. Companies will need
to disaggregate new and existing disclosures based on how it develops
its allowance for loan losses and how it manages credit exposures.
Additional disclosure is also required about the credit quality
indicators of loans by class at the end of the reporting period, the
aging of past due loans, information about troubled debt
restructurings, and significant purchases and sales of loans during the
reporting period by class. The new guidance is effective for interim-
and annual periods beginning after December 15, 2010. Management
anticipates that the adoption of these additional disclosures will not
have a material effect on the Company's financial position or results
of operations.

Other accounting standards that have been issued or proposed by FASB
that do not require adoption until a future date are not expected to
have a material impact on the consolidated financial statements upon
adoption.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCOURSES ABOUT MARKET RISK.

Not applicable to smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Genesis Electronics Group, Inc.
Hollywood, Florida

We have audited the accompanying consolidated balance sheets of Genesis
Electronics Group, Inc. and Subsidiary as of December 31, 2009 and
2008, and the related consolidated statement of operations, changes in
stockholders' deficit and cash flow for the years then ended. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purposes of
expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining on a test basis, evidence
supporting the amount and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Genesis Electronics Group, Inc. and Subsidiary as of as of December 31,
2009 and 2008, and the result of their operations and their cash flow
for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 8 to the financial statements, the Company has an
accumulated deficit, has net losses and cash used in operations for the
year ended December 31, 2009. This raises substantial doubt about its
ability to continue as a going concern. Management's plans in regards
to these matters are also described in Note 8. The consolidated
financial statement does not include any adjustments that might result
from the outcome of this uncertainty.

/s/Malcolm L. Pollard, Inc.
Erie, Pennsylvania
March 18, 2011

24
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

Year ended
----------
December 31, 2009 December 31, 2008
----------------- -----------------
(Restated -
See Note 13)
ASSETS

Current Assets:
Cash $ 66,069 $ 2,319
Prepaid expense and other
current asset 14,160 3,160
----------- -----------
Total current assets 80,229 5,479
Property and Equipment, net 695 1,371
License agreement, net 200,292 -
----------- -----------
Total assets $ 281,216 $ 6,850
=========== ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued
expenses $ 264,857 $ 152,837
Accrued payable on license
agreement 155,000 -
Convertible debt 931,919 931,919
Note payable 15,647 15,647
Loans payable 40,000 40,000
Due to related parties 40,485 78,385
Deferred revenue 176 682
----------- -----------
Total current liabilities 1,448,084 1,219,470
----------- -----------
Stockholders' Deficit:
Common stock, $0.001 par value,
300,000,000 authorized,
152,644,072 and 106,602,989
issued and outstanding, at
December 31, 2009 and December
31, 2008, respectively 152,644 106,603
Additional paid-in capital 6,879,836 6,219,824
Accumulated deficit (8,125,631) (7,513,897)
Subscription receivable (73,717) (25,150)
----------- -----------
Total stockholders' deficit (1,166,868) (1,212,620)
----------- -----------
Total liabilities and stockholders'
deficit $ 281,216 $ 6,850
=========== ===========

See notes to audited consolidated financial statements.

25
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended
December 31,
------------------
2009 2008
---- ----
(Restated -
See Note 13)

Net Sales $ 78,797 $ 111,518
----------- -----------
Operating expenses:
Professional fees 50,049 30,925
Consulting fees 63,780 255,389
Compensation 226,882 434,295
Other selling, general and administrative 149,368 166,155
----------- -----------
Total operating expenses 490,079 886,764
----------- -----------
Loss from operations (411,282) (775,246)
----------- -----------
Other income (expenses):
Other expense - (75)
Gain on settlement of debt - 469,284
Impairment expense - (1,717,602)
Interest expense (200,452) (1,053,058)
----------- -----------
Total other income (expenses) (200,452) (2,301,451)
----------- -----------
Loss before provision for income taxes (611,734) (3,076,697)
Provision for income taxes - -
----------- -----------
Net loss $ (611,734) $(3,076,697)
=========== ===========
Net loss per common share
- basic and diluted $ - $ (0.05)
Weighted average number of shares
0utstanding - basic and diluted 135,405,327 56,810,124
=========== ===========

See notes to audited consolidated financial statements.

26
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

Common Stock,
$.001 Par Value
--------------- Additional
Number of Paid-in
Shares Amount Capital
---------- ---------- ----------

Balance, December 31, 2007 28,948,873 28,949 $4,287,378
Sale of common stock 25,361,916 25,362 340,600
Common stock issued for services 37,600,000 37,600 295,950
Cancellation of common stock issued
previously for services (3,100,000) (3,100) (7,130)
Common stock issued as a replacement
for issuance of stock options in
connection with a consulting agreement 1,000,000 1,000 (55,902)
Common stock issued for prepaid services 3,600,000 3,600 97,767
Common stock issued for settlement of
related party loans 66,000 66 31,734
Common stock issued for convertible debt 11,218,830 11,218 106,580
Common stock issued in connection with the
merger agreement 1,907,370 1,908 55,236
Beneficial conversion on convertible debt - - 1,049,717
Stock warrants issued for services - - 17,894
Net loss for the period - - -
----------- --------- ----------
Balance December 31, 2008 106,602,989 $ 106,603 $6,219,824
Sale of common stock 36,486,083 36,486 295,877
Common stock issued for services 2,655,000 2,655 82,035
Common stock issued for settlement of
related party loans 4,900,000 4,900 240,100
Common stock issued in connection with a
license agreement 2,000,000 2,000 42,000
Net loss for the period - - -
----------- --------- ----------
Balance, December 31, 2009 152,644,072 $ 152,644 $6,879,836
=========== ========= ==========

See notes to audited consolidated financial statements.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
CONTINUED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

Total
Accumulated Subscription Stockholders'
Deficit Receivable Deficit
---------- ---------- ----------

Balance, December 31, 2007 $(4,437,200) $ - $ (120,873)
Sale of common stock - (25,150) 340,812
Common stock issued for services - - 333,550
Cancellation of common stock issued
previously for services - - (10,230)
Common stock issued as a replacement
for issuance of stock options in
connection with a consulting agreement - - (54,902)
Common stock issued for prepaid services - - 101,367
Common stock issued for settlement of
related party loans - - 31,800
Common stock issued for convertible debt - - 117,798
Common stock issued in connection with the
merger agreement - - 57,144
Beneficial conversion on convertible debt - - 1,049,717
Stock warrants issued for services - - 17,894
Net loss for the period (3,076,697) - (3,076,697)
----------- ---------- -----------
Balance December 31, 2008 (7,513,897) (25,150) (1,212,620)
Sale of common stock - (48,567) 283,796
Common stock issued for services - - 84,690
Common stock issued for settlement of
related party loans - - 245,000
Common stock issued in connection with a
license agreement - - 44,000
Net loss for the period
(Restated - See Note 13) (611,734) - (531,734)
----------- --------- -----------
Balance, December 31, 2009 $ 8,125,631 $ (73,717) $(1,166,868)
=========== ========= ===========

See notes to audited consolidated financial statements.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended
December 31,
------------------
2009 2008
---- ----
(Restated -
See Note 13)
Cash flows from operating activities:
Net loss $ (611,734) $(3,076,697)
---------- -----------
Adjustments to reconcile net loss to
net cash used in operations:
Depreciation 676 2,524
Amortization of license agreement 8,708 -
Common stock issued for services 84,690 323,320

Stock warrants issued for services - 17,894
Amortization of prepaid expense in
connection with deferred compensation - 187,585
Gain on settlement of debt - (469,284)
Interest expense for the settlement of a
Related party loan 196,000 -
Interest expense in connection with the
settlement agreement - 1,049,717
Impairment of goodwill - 1,717,602
Changes in assets and liabilities:
Prepaid expenses and other (11,000) -
Accounts payable and accrued expenses 112,020 (6,394)
Deferred revenues (506) (1,010)
---------- -----------
Total adjustments 310,588 2,821,954
Net cash used in operating activities (221,146) (254,743)
---------- -----------
Cash flows from investing activities:
Payment on license agreement (10,000) -
---------- -----------
Net cash used in investing activities (10,000) -
---------- -----------

Cash flows from financial activities:
Proceeds from sale of common stock 283,796 340,812
Proceeds from related parties 18,000 8,000
Payments on related party advances (6,900) (92,600)
---------- -----------
Net cash provided by financing activities 294,896 256,212
---------- -----------
Net increase in cash 63,750 1,469
Cash - beginning of the year 2,319 850
---------- -----------
Cash - end of the year $ 66,069 $ 2,319
========== ===========

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
CONTINUED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended
December 31,
------------------
2009 2008
---- ----
(Restated -
See Note 13)

Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ - $ -
========== ==========
Income taxes $ - $ -
========== ==========
NON-CASH INVESTING AND FINANCING ACTIVITEIS:
Common stock issued for future services $ - $ 101,367
========== ==========
Common stock issued for settlement
of loans $ 49,000 $ 149,598
========== ==========
Common stock issued in connection
with license agreement $ 44,000 $ -
========== ==========
Accrued payable incurred for
license agreement $ 155,000 $ -
========== ==========

See notes to audited consolidated financial statements

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Basis of presentation

The consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States of
America ("US GAAP"). The consolidated statements include the accounts
of Genesis Electronics Group, Inc. formerly Pricester.com, Inc. and its
wholly-owned subsidiary. All significant inter-company balances and
transactions have been eliminated.

ASB Accounting Standards Codification

The issuance by the FASB of the Accounting Standards CodificationTM
(the "Codification") on July 1, 2009 (effective for interim or annual
reporting periods ending after September 15, 2009), changes the way
that GAAP is referenced. Beginning on that date, the Codification
officially became the single source of authoritative nongovernmental
GAAP; however, SEC registrants must also consider rules, regulations,
and interpretive guidance issued by the SEC or its staff. The change
affects the way the Company refers to GAAP in financial statements and
in its accounting policies. All existing standards that were used to
create the Codification became superseded. Instead, references to
standards consist solely of the number used in the Codification's
structural organization.

Organization

Genesis Electronics Group, Inc. formerly Pricester.com, Inc. was
incorporated under the name Pricester, Inc. on April 19, 2001 in the
State of Florida. Pursuant to Articles of Amendment filed on February
24, 2009, the name of the registrant was changed to Genesis Electronics
Group, Inc.

On February 11, 2005, Pricester.Com (the "Company") merged into
Pricester.com, Inc, ("BA22") a public non-reporting company (that was
initially incorporated in Nevada in March 1998 as Business Advantage
#22, Inc). BA22 acquired 100% of the Company's outstanding common stock
by issuing one share of its common stock for each share of the
Company's then outstanding common stock of 21,262,250 shares. The
acquisition was treated as a recapitalization for accounting purposes.

Through December 31, 2005, the Company was a developmental stage e-
commerce company. The Company currently operates an e-commerce website
that enables any business to establish a fully functional online retail
presence. Pricester.com is an Internet marketplace which allows vendors
to host their website with product and service listings and allows
consumers to search for listed products and services.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

In May 2008, the Company obtained through a vote of majority of its
shareholders the approval to increase the authorized common shares from
50,000,000 to 300,000,000 shares of common stock at $0.001 par value.

On May 22, 2008, the Company completed a share exchange with Genesis
Electronics, Inc., a Delaware corporation ("Genesis") which is
described below.

The share exchange is being accounted for as a purchase method
acquisition pursuant to FASB ASC 805 "Business Combinations".
Accordingly, the purchase price was allocated to the fair value of the
assets acquired and the liabilities assumed. The Company is the
acquirer for accounting purposes and Genesis is the acquired company.

Genesis was originally formed in Delaware on October 22, 2001 and is
engaged on the development of solar and alternative energy applications
for consumer devices such as mobile phones.

In November 2008, the Company obtained through a vote of majority of
its shareholders the approval to change the Company's name to Genesis
Electronics Group, Inc. In February 2009, the Company filed an
amendment to its Articles of Incorporation with the Secretary of State
of Nevada. The Company changed its name to Genesis Electronics Group,
Inc.

Acquisition of Genesis

On May 22, 2008, the Company entered into an Agreement and Plan of
Share Exchange (the "Acquisition Agreement") by and among the Company,
Genesis Electronics, Inc. ("Genesis") and the Genesis Stockholders.
Upon closing of the merger transaction contemplated under the
Acquisition Agreement (the "Acquisition"), on May 22, 2008 the Company
acquired all of the outstanding common shares of Genesis and Genesis
became a wholly-owned subsidiary of the Company.

The share exchange consideration included the issuance of 1,907,370
shares of the Company's stock valued at $0.03 per share. The total
purchase price was common stock valued at $57,144.

The Company accounted for the acquisition utilizing the purchase method
of accounting in accordance with FASB ASC 805, "Business Combinations".
The Company is the acquirer for accounting purposes and Genesis is the
acquired company. Accordingly, the Company applied push-down
accounting and adjusted to fair value all of the assets and liabilities
directly on the financial

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

statements of the Subsidiary, Genesis Electronics, Inc. The net
purchase price, including acquisition costs paid by the Company, was
allocated to the liabilities assumed on the records of the Company as
follows:

Goodwill $ 1,717,602
Liabilities assumed (1,660,458)
-----------
Net purchase price $ 57,144
===========

Since the Company has minimal revenues, has incurred losses and cash
used in operations, the Company deemed the acquired goodwill to be
impaired and wrote-off the goodwill on the acquisition date.
Accordingly, during fiscal year 2008, the Company recorded an
impairment of goodwill of $1,717,602 on the accompanying statement of
operations.

Unaudited pro forma results of operations data as if the Company and
Genesis had occurred are as follows:

The Company and The Company and
Genesis Genesis
For the Year For the Year
Ended ended
December 31, 2009 December 31, 2008
----------------- -----------------
Pro forma revenues $ 78,797 $ 111,518
Pro forma loss from operations $ (411,282) $ (917,827)
Pro forma net loss $ (611,734) $(3,245,084)
Pro forma loss per share $ (0.00) $ (0.06)
Pro forma diluted loss per share $ (0.00) $ (0.06)

Pro forma data does not purport to be indicative of the results that
would have been obtained had these events actually occurred and is not
intended to be a projection of future results.

Reclassification

Certain amounts in the 2008 consolidated financial statements have been
reclassified to conform to the 2009 presentation. Such
reclassifications had no effect on the reported net loss.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates. Significant estimates in 2009 and 2008 include
the valuation of stock-based compensation, and the useful life of
property, equipment, website development and valuation of beneficial
conversion feature in connection with convertible debt.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid instruments purchased with a maturity of
three months or less and money market accounts to be cash equivalents.

Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted FASB ASC 820, "Fair
Value Measurements and Disclosures" ("ASC 820"), for assets and
liabilities measured at fair value on a recurring basis. ASC 820
establishes a common definition for fair value to be applied to
existing generally accepted accounting principles that require the use
of fair value measurements, establishes a framework for measuring fair
value and expands disclosure about such fair value measurements. The
adoption of ASC 820 did not have an impact on the Company's financial
position or operating results, but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Additionally, ASC
820 requires the use of valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs. These
inputs are prioritized below:

Level 1: Observable inputs such as quoted market prices in active
markets for identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that
are corroborated by market data
Level 3: Unobservable inputs for which there is little or no market
data, which require the use of the reporting entity's own assumptions.

34
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

Cash and cash equivalents include money market securities that are
considered to be highly liquid and easily tradable as of December 31,
2009 and 2008, respectively. These securities are valued using inputs
observable in active markets for identical securities and are therefore
classified as Level 1 within our fair value hierarchy.

In addition, FASB ASC 825-10-25 Fair Value Option was effective for
January 1, 2008. ASC 825-10-25 expands opportunities to use fair value
measurements in financial reporting and permits entities to choose to
measure many financial instruments and certain other items at fair
value. The Company did not elect the fair value options for any of its
qualifying financial instruments.

The carrying amounts reported in the consolidated balance sheet for
cash, accounts payable, accrued expenses, loans payable, notes payable,
due to related parties and deferred revenue approximate their fair
market value based on the short-term maturity of these instruments.

Property and Equipment

Property and equipment are stated at cost. Depreciation and
amortization are provided using the straight-line method over the
estimated economic lives of the assets, which are from five to seven
years. Expenditures for major renewals and betterments that extend the
useful lives of property and equipment are capitalized. Expenditures
for maintenance and repairs are charged to expense as incurred.

Website Development

Costs that the Company has incurred in connection with developing the
Company's websites are capitalized and amortized using the straight-
line method over expected useful lives of three years.

Impairment of Long-lived Assets

Long-Lived Assets of the Company are reviewed for impairment whenever
events or circumstances indicate that the carrying amount of assets may
not be recoverable, pursuant to guidance established in ASC 360-10-35-
15, "Impairment or Disposal of Long-Lived Assets". The Company
recognizes an impairment loss when the sum of expected undiscounted
future cash flows is less than the carrying amount of the asset. The
amount of impairment is measured as the difference between the asset's
estimated fair value and its book value. The Company did not consider
it necessary to record any impairment charges during the year ended
December 31, 2009. For the year ended December 31, 2008, the Company
recorded an impairment of goodwill of $1,717,602 on the accompanying
statement of operations.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

Stock-Based Compensation

Net Loss per Common Share

Net loss per common share are calculated in accordance with ASC Topic
260: Earnings Per Share. Basic loss per share is computed by dividing
net loss by the weighted average number of shares of common stock
outstanding during the period. The computation of diluted net earnings
per share does not include dilutive common stock equivalents in the
weighted average shares outstanding as they would be anti-dilutive. As
of December 31, 2009 and 2008, there were options and warrants to
purchase 2,025,000 shares of common stock and 93,191,998 shares
equivalent issuable pursuant to embedded conversion features which
could potentially dilute future earnings per share.

Income Taxes

Income taxes are accounted for under the asset and liability method as
prescribed by ASC Topic 740: Income Taxes. Deferred income tax assets
and liabilities are computed for differences between the carrying
amounts of assets and liabilities for financial statement and tax
purposes. Deferred income tax assets are required to be reduced by a
valuation allowance when it is determined that it is more likely than
not that all or a portion of a deferred tax asset will not be realized.
In determining the necessity and amount of a valuation allowance,

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

management considers current and past performance, the operating market
environment, tax planning strategies and the length of tax benefit
carryforward periods.

Pursuant to ASC Topic 740-10: Income Taxes related to the accounting
for uncertainty in income taxes, the evaluation of a tax position is a
two-step process. The first step is to determine whether it is more
likely than not that a tax position will be sustained upon examination,
including the resolution of any related appeals or litigation based on
the technical merits of that position. The second step is to measure a
tax position that meets the more-likely-than-not threshold to determine
the amount of benefit to be recognized in the financial statements. A
tax position is measured at the largest amount of benefit that is
greater than 50% likelihood of being realized upon ultimate settlement.
Tax positions that previously failed to meet the more-likely-than-not
recognition threshold should be recognized in the first subsequent
period in which the threshold is met. Previously recognized tax
positions that no longer meet the more-likely-than-not criteria should
be de-recognized in the first subsequent financial reporting period in
which the threshold is no longer met. The accounting standard also
provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosures, and transition.
The adoption had no effect on the Company's consolidated financial
statements.

Research and Development

Research and development costs, if any, are expensed as incurred.

Related Parties

Parties are considered to be related to the Company if the parties
that, directly or indirectly, through one or more intermediaries,
control, are controlled by, or are under common control with the
Company. Related parties also include principal owners of the Company,
its management, members of the immediate families of principal owners
of the Company and its management and other parties with which the
Company may deal if one party controls or can significantly influence
the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its
own separate interests. The Company discloses all related party
transactions. All transactions shall be recorded at fair value of the
goods or services exchanged. Property purchased from a related party is
recorded at the cost to the related party and any payment to or on
behalf of the related party in excess of the cost is reflected as a
distribution to related party.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

Subsequent Events

For purposes of determining whether a post-balance sheet event should
be evaluated to determine whether it has an effect on the financial
statements for the period ending December 31, 2009, subsequent events
were evaluated by the Company as of the date on which the audited
consolidated financial statements at and for the period ended December
31, 2009, were available to be issued.

Revenue Recognition

The Company follows the guidance of the FASB ASC 605-10-S99 "Revenue
Recognition Overall - SEC Materials. The Company records revenue when
persuasive evidence of an arrangement exists, services have been
rendered or product delivery has occurred, the sales price to the
customer is fixed or determinable, and collectibility is reasonably
assured. The Company applies ASC 605-25: Multiple Element Arrangements,
to account for revenue arrangements with multiple deliverables. ASC
605-25 addresses certain aspects of accounting by a vendor for
arrangements under which the vendor will perform multiple revenue-
generating activities. When an arrangement involves multiple elements,
the entire fee from the arrangement is allocated to each respective
element based on its relative fair value and recognized when revenue
recognition criteria for each element are met. Fair value for each
element is established based on the sales price charged when the same
element is sold separately.

The following policies reflect specific criteria for the various
revenues streams of the Company:

The Company has three primary revenue sources: website design,
transaction fees, and hosting fees.

- Website design revenue is recognized as earned when the website
is complete, control is transferred and the customer has accepted its
website, usually within seven days of the order.
- Transaction fee income comprises fees charged for use of credit
cards or other forms of payment in the purchase of items sold on the
customers' websites. The transaction fee income is recognized as earned
when funds transfers (via credit card or other forms of payments)
between the buyer and seller has been authorized.
- Revenues from website hosting fees are recognized when earned.
Web hosting fees received in advance are reflected as deferred revenue
on the accompanying balance sheet.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

Recent accounting pronouncements

In June 2009, the FASB issued Accounting Standards Update No. 2009-01,
"Generally Accepted Accounting Principles" (ASC Topic 105) which
establishes the FASB Accounting Standards Codification ("the
Codification" or "ASC") as the official single source of authoritative
U.S. generally accepted accounting principles ("GAAP"). All existing
accounting standards are superseded. All other accounting guidance not
included in the Codification will be considered non-authoritative. The
Codification also includes all relevant Securities and Exchange
Commission ("SEC") guidance organized using the same topical structure
in separate sections within the Codification.

Following the Codification, the Board will not issue new standards in
the form of Statements, FASB Staff Positions or Emerging Issues Task
Force Abstracts. Instead, it will issue Accounting Standards Updates
("ASU") which will serve to update the Codification, provide background
information about the guidance and provide the basis for conclusions on
the changes to the Codification.

In April 2009, the FASB issued ASC Topic 320-10-65, "Interim
Disclosures About Fair Value of Financial Instruments". This update
requires fair value disclosures for financial instruments that are not
currently reflected on the balance sheet at fair value on a quarterly
basis and is effective for interim periods ending after June 15, 2009.
The Company's financial instruments include cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses and notes
payable. At December 31, 2009 and 2008 the carrying value of the
Companies financial instruments approximated fair value, due to their
short term nature.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
In May 2009, the FASB issued (ASC Topic 855), "Subsequent Events" (ASC
Topic 855). This guidance is intended to establish general standards of
accounting for and disclosure of events that occur after the balance
sheet date but before financial statements are issued or available to
be issued. It is effective for interim and annual reporting periods
ending after June 15, 2009. The adoption of this guidance did not have
a material impact on our consolidated financial statements.

In June 2009, the FASB issued ASC Topic 810-10, "Amendments to FASB
Interpretation No. 46(R)". This updated guidance requires a qualitative
approach to identifying a controlling financial interest in a variable
interest entity (VIE), and requires ongoing assessment of whether an
entity is a VIE and whether an interest in a VIE makes the holder the
primary beneficiary of the VIE. It is effective for annual reporting
periods beginning after November 15, 2009. The adoption of ASC Topic
810-10 did not have a material impact on the results of operations and
financial condition.

In October 2009, the FASB issued ASU No. 2009-13, "Multiple-Deliverable
Revenue Arrangements." This ASU establishes the accounting and
reporting guidance for arrangements including multiple revenue-
generating activities. This ASU provides amendments to the criteria for
separating deliverables, measuring and allocating arrangement
consideration to one or more units of accounting. The amendments in
this ASU also establish a selling price hierarchy for determining the
selling price of a deliverable. Significantly enhanced disclosures are
also required to provide information about a vendor's multiple-
deliverable revenue arrangements, including information about the
nature and terms, significant deliverables, and its performance within
arrangements. The amendments also require providing information about
the significant judgments made and changes to those judgments and about
how the application of the relative selling-price method affects the
timing or amount of revenue recognition. The amendments in this ASU are
effective prospectively for revenue arrangements entered into or
materially modified in the fiscal years beginning on or after June 15,
2010. Early application is permitted. The Company is currently
evaluating this new ASU.

In October 2009, the FASB issued ASU No. 2009-14, "Certain Revenue
Arrangements That Include Software Elements." This ASU changes the
accounting model for revenue arrangements that include both tangible
products and software elements that are "essential to the
functionality," and scopes these products out of current software
revenue guidance. The new guidance will include factors to help
companies determine what software elements are considered "essential to
the functionality." The amendments will now subject software-enabled
products to other revenue guidance and disclosure requirements, such as
guidance surrounding revenue arrangements with multiple-deliverables.
The amendments in this ASU are effective prospectively for revenue

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)

arrangements entered into or materially modified in the fiscal years
beginning on or after June 15, 2010. Early application is permitted.
The Company is currently evaluating this new ASU.

NOTE 2 - PROPERTY AND EQUIPMENT

At December 31, 2009, property and equipment consist of the following:

Useful Life
(Years)
-----------
Computer equipment and software 5 $ 12,542
Office furniture and fixtures and
equipment 7 4,328
---------
16,870
Less accumulated depreciation (16,175)
---------
$ 695
=========

At December 31, 2008, property and equipment consist of the following:

For the years ended December 31, 2009 and 2008, depreciation expense
amounted to $676 and $1,893, respectively.

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 3 - LOANS PAYABLE

On May 22, 2008, in connection with the acquisition, the Company
assumed loans payable from certain third parties. These loans bear 8%
interest per annum and are payable on demand. As of December 31, 2009,
loans payable and related accrued interest amounted to $40,000 and
$11,571, respectively. As of December 31, 2008, loans payable and
related accrued interest amounted to $40,000 and $8,371, respectively.

NOTE 4 - RELATED PARTY TRANSACTIONS

During fiscal 2009 and 2008, certain officers of the Company advanced
funds to the Company for working capital purposes. The advances are
non-interest bearing and are payable on demand. At December 31, 2009
and December 31, 2008, the Company owed these related parties $40,485
and $78,385, respectively.

In May 2009, the Company issued 4,900,000 shares of common stock to an
officer of the Company in connection with a settlement of related party
loans of $49,000. The Company valued these common shares at the fair
market value on the date of grant at $0.05 per share or $245,000. The
Company has recognized interest expense of $196,000 in connection with
this settlement.

NOTE 5 - INCOME TAXES

The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" "SFAS 109".
SFAS 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and the tax basis of assets and liabilities, and
for the expected future tax benefit to be derived from tax losses and
tax credit carryforwards. SFAS 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets. The Company has a net operating
loss carryforward for tax purposes totaling approximately $4.4 million
at December 31, 2009 expiring through the year 2029. Internal Revenue
Code Section 382 places a limitation on the amount of taxable income
that can be offset by carryforwards after a change in control
(generally greater than a 50 percent change in ownership).

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 5 - INCOME TAXES (continued)

Temporary differences, which give rise to a net deferred tax asset, are
as follows:

2009 2008
-------------------------------
Computed "expected" benefit $(196,189) $(1,046,077
State tax benefit, net of federal
effect (23,081) (123,068)
Other permanent differences 74,480 1,058,381
Increase in valuation allowance 144,790 110,764
--------- -----------
$ - $ -
========= ===========

Deferred tax assets and liabilities are provided for significant income
and expense items recognized in different years for tax and financial
reporting purposes. Temporary differences, which give rise to a net
deferred tax asset is as follows:
2009
----------
Deferred tax assets:
Net operating loss carryforward $ 1,806,991

Less: Valuation allowance (1,806,991)
----------
-
==========

The valuation allowance at December 31, 2009 was $1,806,991. The
increase during fiscal 2009 was $144,790.

NOTE 6 - NOTE PAYABLE

On May 22, 2008, in connection with the acquisition, the Company
assumed a note payable from a third party. These loans bear 8% interest
per annum and is payable on demand. As of December 31, 2009, note
payable and related accrued interest amounted to $15,647 and $7,480,
respectively. As of December 31, 2008, note payable and related accrued
interest amounted to $15,647 and $6,228, respectively.

NOTE 7 - CONVERTIBLE DEBT

On May 22, 2008, in connection with the acquisition, the Company
assumed certain debts from a third party, Corporate Debt Solutions
("Corporate Debt") amounting to $1,049,717. Corporate Debt assumed a
total of $1,049,717 of promissory notes issued by two former officers
of Genesis and a certain third party. These promissory notes were
issued to the Company's subsidiary, Genesis. Immediately following the
closing of the

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 7 - CONVERTIBLE DEBT (Continued)

acquisition agreement, on May 23, 2008, the Company entered into a
settlement agreement with Corporate Debt Solutions ("Corporate Debt").
Pursuant to the settlement agreement, the Company shall issue shares of
common stock and deliver to Corporate Debt, to satisfy the principal
and interest due and owing through the issuance of freely trading
securities of up to 100,000,000 shares. The parties have agreed that
Corporate Debt shall have no ownership rights to the Settlement Shares
not yet issued until it has affirmed to the Company that it releases
the Company for the proportionate amount of claims represented by each
issuance. The said requested number of shares of common stock is not
to exceed 4.99% of the outstanding stock of the Company at any one
time. In connection with this settlement agreement, the Company
recorded and deemed such debt as a convertible liability with a fixed
conversion price of $0.01. Accordingly, the Company recognized a total
debt discount of $1,049,717 due to a beneficial conversion feature and
such debt discount was immediately amortized to interest expense during
fiscal year 2008.

The Company had an outstanding balance of approximately $1,399,490 to
two former officers of Genesis which had been included in current
liabilities prior to this settlement. Pursuant to this settlement
agreement, the Company settled for $930,206 (included in the $1,049,717
discussed above) and the Company was released from further claim. The
Company has recognized a gain from debt settlement of $469,284 during
the year ended December 31, 2008.

In June 2008, the Company issued 2,223,456 shares in connection with
the conversion of this convertible debt. The fair value of such shares
issued amounted to approximately $23,346.

Between July 2008 and August 2008, the Company issued 8,995,374 shares
in connection with the conversion of this convertible debt. The fair
value of such shares issued amounted to approximately $94,452.

At December 31, 2009 and December 31, 2008, convertible debt amounted
to $931,919.

NOTE 8 - GOING CONCERN

The accompanying audited consolidated financial statements are prepared
assuming the Company will continue as a going concern. Going concern
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business over a reasonable length
of time. The Company was in the development stage through December 31,
2005 and has an accumulated deficit of $8,125,631, had net losses,
negative working capital and negative cash flows from operations for
the year ended December 31, 2009 of $611,734, $1,367,855 and $221,146
respectively. While the Company is attempting to increase revenues,

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 8 - GOING CONCERN (Continued)

the growth has not been significant enough to support the Company's
daily operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result
from the outcome of this uncertainty. For the year ended December 31,
2009, the Company sold 36,486,083 common shares for net proceeds of
$223,379 and subscription receivable of $108,984. For the year ended
December 31, 2009, the Company collected subscription receivable of
$60,417.

Management is attempting to raise additional funds by way of a public
or private offering. While the Company believes in the viability of
its strategy to increase sales volume and in its ability to raise
additional funds, there can be no assurances to that effect. The
Company shareholders have continued to advance funds to the Company but
there can be no assurance that future advances will be made available.

The Company's limited financial resources have prevented the Company
from aggressively advertising its products and services to achieve
consumer recognition. These financial statements do not include any
adjustments relating to the recoverability and classifications of
recorded assets, or the amounts and classification of liabilities that
might be necessary in the event the Company cannot continue in
existence.

NOTE 9 - STOCKHOLDERS' DEFICIT

Common Stock
During the year ended December 31, 2008, the Company received net
proceeds of $340,812 and subscription receivable of $25,150 from the
sale of 25,361,916 shares of the Company's common stock.

In January 2008, the Company issued 66,000 shares of common stock to
officers of the Company in connection with a settlement of related
party loans of $31,800.

In January 2008, in connection with a three month consulting agreement,
the Company issued 800,000 shares of common stock for investor
relations services. The Company valued these common shares at the fair
market value on the date of grant at $.07 per share or $56,000. In
connection with issuance of these shares, the Company recorded stock-
based consulting expense of $56,000 during the year ended December 31,
2008.

In January 2008, the Company issued in aggregate 3,000,000 shares of
common stock to the Company's CEO and an officer of the Company in
connection with employment agreements dated January 14, 2008. The

GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

Company valued these common shares at the fair market value on the date
of grant at $.07 per share or $210,000 and has been recorded as stock-
based compensation.

In February 2008, in connection with a twelve month consulting
agreement, the Company issued 500,000 shares of common stock for
corporate advisory services. The Company valued these common shares at
the fair market value on the date of grant at $.18 per share or
$90,000. In connection with issuance of these shares, during the year
ended December 31, 2008, the Company recorded stock-based consulting
expense of $90,000.

In February 2008, the Company amended a consulting agreement entered
into on June 28, 2007, whereby the consultant will no longer receive
the 1,000,000 options to purchase the Company's common stock but
instead shall receive 1,000,000 shares of the Company's common stock.
The Company valued these common shares at the fair market value on the
date of grant at $.10 per share or $100,000. The Company has recognized
stock-based consulting expense of $80,668 during fiscal 2007, in
connection with this agreement. Accordingly, as a result of this
amended agreement, the Company has recognized stock-based consulting
expense of $19,332 and has reversed the unamortized portion of $54,902
in prepaid expense related to the valuation of the stock options during
the year ended December 31, 2008.

In June 2008, in connection with a consulting agreement, the Company
issued 3,100,000 shares of common stock for investor relations
services. The Company valued these common shares at the fair market
value on the date of grant at $.04 per share or $136,400. In connection
with issuance of these shares, the Company recorded stock-based
consulting expense of $11,367 and prepaid expense of $125,033 to be
amortized over the balance of the service period. In September 2008,
the Company terminated this agreement and accordingly cancelled the
3,100,000 shares of common stock. In connection with the return of the
3,100,000 shares of common stock, the Company reduced stock-based
compensation expense by approximately $10,230 based on the fair market
value of the common stock on the date of cancellation of $0.003 per
share and has reversed the unamortized portion of $125,033 in prepaid
expense related to the valuation of the stock options during the year
ended December 31, 2008.

In June 2008, the Company issued 2,223,456 shares in connection with
the conversion of this convertible debt. The fair value of such shares
issued amounted to approximately $23,346.

46
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

In August 2008, the Company issued 250,000 shares of common stock for
corporate advisory services rendered. The Company valued these common
shares at the fair market value on the date of grant at $.0065 per
share or $1,625. In connection with issuance of these shares, the
Company recorded stock-based consulting expense of $1,625 during the
year ended December 31, 2008.

In August 2008, the Company issued 150,000 shares of common stock for
investor relation services rendered. The Company valued these common
shares at the fair market value on the date of grant at $.0035 per
share or $525. In connection with issuance of these shares, the Company
recorded stock-based consulting expense of $525 during the year ended
December 31, 2008.

In November 2008, the Company issued in aggregate 30,000,000 shares of
common stock to the Company's CEO and an officer of the Company for
services rendered. The Company valued these common shares at the fair
market value on the date of grant at $.002 per share or $60,000 and has
been recorded as stock-based compensation.

In November 2008, the Company issued in aggregate 400,000 shares of
common stock to certain employees of the Company for services rendered.
The Company valued these common shares at the fair market value on the
date of grant at $.002 per share or $800 and has been recorded as
stock-based compensation.

Between October and November 2008, the Company issued in aggregate
3,000,000 shares of common stock to the Company's CEO and an officer of
the Company pursuant to amended employment agreements. The Company
valued these common shares at the fair market value on the date of
grant ranging from $0.001 to $.002 per share or $4,600 and has been
recorded as stock-based compensation.

During fiscal 2008, in connection with the Merger Agreement, the
Company issued 1,907,370, shares of common stock valued at $0.03 per
share or $57,144. The Company valued these common shares at the fair
market value on the date of grant.

For the year ended December 31, 2009, the Company received net proceeds
of $223,379 and subscription receivable of $108,984 from the sale of
36,486,083 shares of the Company's common stock.

For the year ended December 31, 2009, the Company collected
subscription receivable of $60,417.

47
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

market value on the date of grant at $0.05 per share or $245,000. The
Company has recognized interest expense of $196,000 in connection with
this settlement.

Between August 2009 and September 2009, the Company issued an aggregate
of 200,000 shares of common stock for technical advisory services
rendered. The Company valued these common shares at the fair value on
the date of grant ranging approximately from $.03 to $.05 per share or
$8,090. In connection with issuance of these shares, the Company
recorded stock-based consulting expense of $8,090 during the year ended
December 31, 2009.

In October 2009, the Company issued in aggregate 2,000,000 shares of
common stock to the Company's CEO and an officer of the Company in
connection with their employment agreements. The Company valued these
common shares at the fair market value on the date of grant at $.031
per share or $62,000 and has been recorded as stock-based compensation.

In October 2009, the Company issued in aggregate 150,000 shares of
common stock to three officers of the Company for services rendered.
The Company valued these common shares at the fair market value on the
date of grant at $.031 per share or $4,650 and has been recorded as
stock-based compensation.

In November 2009, the Company issued 2,000,000 shares of common stock
in connection with a license agreement. The Company valued these
common shares at the fair market value on the date of grant ranging at
$.022 per share or $44,000 and has been capitalize as reflected in the
accompanying consolidated balance sheet as license agreement.

Between November and December 2009, the Company issued in aggregate
305,000 shares of common stock to consultants for services rendered.
The Company valued these common shares at the fair market value on the
date of grant ranging from $.03 to $.04 per share or $9,950 and has
been recorded as stock-based consulting.

48
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

Stock Options
A summary of the stock options as of December 31, 2009 and 2008 and
changes during the periods are presented below:

Year Ended December 31, Year Ended December 31,
2009 2008
---------------------- ----------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Options Price Options Price
---------------------- ----------------------

Balance at beginning of year 2,025,000 $ 0.40 3,025,000 $ 0.28
Granted - - - -
Exercised - - - -
Cancelled - - (1,000,000) 0.05
--------- ------ ---------- ------
Balance at end of year 2,025,000 $ 0.40 2,025,000 $ 0.40
========= ====== ========== ======
Options exercisable at end
of year 2,025,000 $ 0.40 2,025,000 $ 0.40
========= ====== ========== ======
Weighted average fair value
of options granted during
the year $ - $ -

The following table summarizes the Company's stock option outstanding
at December 31, 2009:

Options Outstanding and Exercisable
-----------------------------------
Weighted Weighted
Average Average
Range of Remaining Exercise
Exercise Price Number Life Price
-------------- ------ --------- -------
$0.40 2,025,000 1 year after 0.40
effective
registration

NOTE 10 - COMMITMENTS

Operating Leases
In October 2009, the Company has signed a 6 months lease agreement
which will expire in March 2010. The office lease agreement has certain
escalation clauses and renewal options. If the Company exercises the
option to renew, the base rent shall increase by 3% per each lease
year. Future minimum rental payments required under the operating lease
are as follows:

49
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 10 - COMMITMENTS (Continued)

Period Ended December 31, 2010 $ 3,350
---------
Total $ 3,350
=========
Rent expense, including common area charges and sales taxes, for the
years ended December 31, 2009 and 2008 was $12,891 and $19,373,
respectively.

Employment Contracts
The Company entered into an employment agreement on January 14, 2008
with its chief executive officer which expires in January 2013. The
employment agreement calls for an issuance of 500,000 free trading
shares of the Company's common stock. Additionally, based on this
agreement, the Company shall issue 1,000,000 restricted shares of
common stock during each fiscal year of the term of this agreement. In
October 2008, this agreement was amended whereby the chief executive
officer shall received 2,000,000 restricted shares of common stock
during each fiscal year instead of 1,000,000 shares which took effect
in fiscal 2009.

The Company entered into an employment agreement on January 14, 2008
with an officer of the Company which expires in January 2013. The
employment agreement calls for an issuance of 500,000 free trading
shares of the Company's common stock. Additionally, based on this
agreement, the Company shall issue 1,000,000 restricted shares of
common stock during each fiscal year of the term of this agreement. In
October 2008, this agreement was amended whereby the officer of the
Company shall received 2,000,000 restricted shares of common stock
during each fiscal year instead of 1,000,000 shares which took effect
in fiscal 2009.

License Agreement
During November 2009, the Company licensed the use of certain patents
from a third party. This license agreement will aid the Company as it
furthers its business plan. In November 2009, the Company entered into
a license agreement with Johns Hopkins University Applied Physics Lab
("JHU/APL") whereby the Company will have a limited exclusive license
to JHU/APL's Integrated Power Source patents. The patents are for the
solar powered cell phone and iPod chargers. The Company has paid
$10,000 and issued 2 million shares of the Company's common stock upon
execution of this agreement. The Company valued these common shares at
the fair market value on the date of grant at $.022 per share or
$44,000.

50
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 10 - COMMITMENTS (Continued)

Future license payments under the license agreement are as follows:

Due March 1, 2010 $10,000
Due June 1, 2010 $10,000
Due September 1, 2010 $10,000
Due upon the one year anniversary of the license $125,000

The Company has capitalized the patent license for a total of $209,000
and is amortizing them over the term of this license agreement. The
Company has recognized $8,708 and $0 of amortization expense during the
year ended December 31, 2009 and 2008, respectively. Accrued payable
related to this license agreement as of December 31, 2009 amounted to
$155,000.

Should the Company elect not to execute the option to an exclusive
license for the patents in advance of the one year anniversary of
execution of license agreement, the $125,000 second year anniversary
execution fee payment will be reduced to $36,000.

The Company shall also pay minimum annual royalty payments as defined
in the license agreement. The royalty is 6% on net sales of the product
sold using the technology under these patents. In addition, the Company
shall pay sales milestone payments as set forth in this license
agreement. The Company may terminate this agreement and the license
granted herein, for any reason, upon giving JHU/APL sixty days written
notice.

NOTE 11 - REPORTABLE SEGMENT

ASC Topic 280 requires use of the "management approach" model for
segment reporting. The management approach model is based on the way a
company's management organizes segments within the company for making
operating decisions and assessing performance. Reportable segments are
based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a
company. During the years ended December 31, 2009 and 2008, the Company
operated in two reportable business segments - (1) the Website segment
and (2) the Solar powered consumer products segment. The Company's
reportable segments are strategic business units that offer different
products and services. The Company's reportable segments, although
integral to the success of the others, offer distinctly different
products and services.

51
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 11 - REPORTABLE SEGMENT (Continued)

Condensed information with respect to these reportable business
segments for the years ended December 31, 2009 and 2008 is as follows:

For the Years Ended
December 31,
2009 2008
---- ----
Revenues:
Website $ 78,797 $ 111,518
Solar powered products - -
--------- ----------
78,797 111,518
--------- ----------
Depreciation:
Website 676 2,524
Solar powered products - -
--------- ----------
676 2,524
--------- ----------
Impairment expense:
Website - -
Solar powered products - 1,717,602
--------- ----------
- 1,717,602
--------- ----------
Interest expense:
Website 196,000 1,049,719
Solar powered products 4,452 3,339
--------- ----------
200,452 1,053,058
--------- ----------
Net loss:
Website 589,223 1,825,027
Solar powered products 22,511 1,251,670
--------- ----------
$ 611,734 $3,076,697
========= ==========
NOTE 12 - SUBSEQUENT EVENTS

Between January 2010 and March 2010, the Company issued 597,384 shares
of the Company's common stock for net proceeds of approximately
$18,005.

In February 2010, the Company issued 250,000 shares of common stock for
public and investor relations services rendered. The Company valued
these common shares at the fair value on the date of grant at $0.04 per
share or $10,000.

52
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 13 - RESTATEMENT

The Company has restated its consolidated financial statements as at
and for the year ended December 31, 2009 to reflect the reversal of
license fees included in other selling, general, and administrative
expense of 54,000, the recording of amortization of license agreement
of $8,708, the recording of accrued salaries of $80,000 in connection
with the amended employment agreements of our chief executive officer
and an officer of the Company,an increase in the net loss of $34,708,
capitalization of the license agreement of $209,000 and the recording
of accrued payable on license agreement of $155,000.

Consolidated Balance Sheet data As at December 31, 2009
Adjustments
As Filed to Restate Restated
-------- ----------- --------

License agreement, net $ - $ 200,292 $ 200,292
========== ========= ===========
Total Assets 80,924 200,292 (a)(b) 281,216
========== ========= ===========
Accounts payable and accrued expenses 184,857 80,000 (e) 264,857

Accrued payable on license agreement - 155,000 (c) 155,000
---------- --------- -----------
Total Current Liabilities 1,213,084 235,000 1,448,084
---------- --------- -----------
Total Liabilities 1,213,084 235,000 1,448,084
---------- --------- -----------
Stockholders' Deficit
Accumulated deficit (8,090,923) (34,708) (8,125,631)
---------- --------- -----------
Total Stockholders' Deficit (1,132,160) (34,708) (1,166,868)
---------- --------- -----------
Total Liabilities and
Stockholders' Deficit $ 80,924 $ 200,292 $ 281,216
========== ========= ===========

(a) To capitalize the patent license of $209,000 based on the license
agreement.
(b) To amortize the license agreement over the term of the agreement
amounting to $8,708.
(c) To record the remaining obligation under the license agreement
($209,000 less $54,000 representing cash payment of $10,000 and stock
payment valued at $44,000 in December 2009).

53
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 13 RESTATEMENT (Continued)

Consolidated Statement of
Income data As at December 31, 2009
Adjustments
As Filed to Restate Restated
-------- ----------- --------

Compensation $ 146,882 $ 80,000 $ 226,882

Other selling, general and
administrative expenses 194,660 (45,292) 149,368
--------- --------- ---------
Total operating expenses 455,371 34,708 (b)(d)(e) 490,079
--------- --------- ---------
Loss from operations 376,574 34,708 411,282
--------- --------- ---------
Net loss $ 577,026 $ 34,708 $ 611,734
========= ========= =========
Net loss per Common Share:
Basic $ (0.00) $ - $ (0.00)
========= ========= =========
Diluted $ (0.00) $ - $ (0.00)
========= ========= =========
Weighted Average Common Shares
Outstanding:
Basic 135,405,327 135,405,327
=========== ===========
Diluted 135,405,327 135,405,327
=========== ===========

(d) To reflect the reversal of license fees included in other selling,
general, and administrative expense of 54,000 representing cash and
stock payment in December 2009.
(e) To record accrued salaries of $80,000 which represents 2,000,000
shares of common stock of the Company payable to the chief executive
officer and an officer of the Company pursuant to their amended
employment agreements. During fiscal 2009, the Company used the fair
market value on the date of grant at $.04 per share.

54
GENESIS ELECTRONICS GROUP, INC. AND SUBSIDIARY
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 and 2008

NOTE 13 RESTATEMENT (Continued)

Consolidated Statement of Cash Flows As at December 31, 2009
Adjustments
As Filed to Restate Restated
-------- ----------- --------

Net loss $ 577,026 $ 34,708 $ 611,734
--------- --------- ---------
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization of license agreement - (8,708) (b) (8,708)
Accounts payable and accrued expenses 32,020 80,000 (e) 112,020

Common stock issued in connection with
a license agreement (44,000) 44,000 -
--------- --------- ---------
Cash Used in Operating Activities (231,146) 10,000 (221,146)
--------- --------- ---------
Cash Flows from Investing Activities
Payment on license agreement - (10,000) (10,000)
--------- --------- ---------
Cash Used in Investing Activities - (10,000) (10,000)
--------- --------- ---------

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None

ITEM 9A. CONTROLS AND PROCEDURES.

Restatement of Previously Issued Financial Statements
-----------------------------------------------------
Management began a review of its reporting policies with respect to its
license agreement and concluded that it should have been capitalized
during the year ended December 31, 2009 as well as the accrual of
salaries of our two officers pursuant to their amended employment
agreements. See Note 13 in the Notes to the Consolidated Financial
Statements section for further details.

This form 10-K/A includes the changes and restatement of the December
31, 2009 year ended financial statements.

Disclosure Controls and Procedures
----------------------------------
As required by Rule 13a-15 under the Securities Exchange Act of 1934,
as of December 31, 2009, the end of the year covered by this report,
our management concluded its evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures.

Disclosure controls and procedures refer to controls and other
procedures designed to ensure that information required to be disclosed
in the reports we file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC and that such
information is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management is required to
apply its judgment in evaluating and implementing possible controls and
procedures.

Our management does not expect that our disclosure controls and
procedures will prevent all error and all fraud. A control system, no
matter how well designed and operated, can provide only reasonable, not
absolute, assurance that the control system's objectives will be met.
Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, have
been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can
occur because of simple error or mistake. The design of any system of

controls is based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions.

Management conducted its evaluation of disclosure controls and
procedures under the supervision of our chief executive officer and our
chief financial officer. Based on that evaluation, Edward Dillon, our
chief executive officer and Nelson Stark, our chief financial officer
concluded that because of the material weaknesses in internal control
over financial reporting described below, our disclosure controls and
procedures were not effective as of December 31, 2009.

Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act. Our management is also
required to assess and report on the effectiveness of our internal
control over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002. Management assessed the effectiveness of
our internal control over financial reporting as of December 31, 2009.
In making this assessment, we used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control - Integrated Framework. During our assessment of
the effectiveness of internal control over financial reporting as of
December 31, 2009, management identified material weaknesses related to
(i) our internal audit functions and (ii) the absence of an Audit
Committee as of December 31, 2009, and (iii) a lack of segregation of
duties within accounting functions. Therefore, our internal controls
over financial reporting were not effective as of December 31, 2009.

Management has determined that our internal audit function is
significantly deficient due to insufficient qualified resources to
perform internal audit functions. Finally, management determined that
the lack of an Audit Committee of our Board of Directors also
contributed to insufficient oversight of our accounting and audit
functions.

Due to our size and nature, segregation of all conflicting duties may
not always be possible and may not be economically feasible. However,
to the extent possible, we will implement procedures to assure that the
initiation of transactions, the custody of assets and the recording of
transactions will be performed by separate individuals.

We believe that the foregoing steps will remediate the material
weaknesses identified above, and we will continue to monitor the
effectiveness of these steps and make any changes that our management
deems appropriate. Due to the nature of these material weaknesses in
our internal control over financial reporting, there is more than a
remote likelihood that misstatements which could be material to our
annual or interim financial statements could occur that would not be
prevented or detected.

A material weakness (within the meaning of PCAOB Auditing Standard No.
5) is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable
possibility that a material misstatement of our annual or interim
financial statements will not be prevented or detected on a timely
basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control over financial reporting that is less
severe than a material weakness, yet important enough to merit
attention by those responsible for oversight of the company's financial
reporting.

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may
deteriorate.

Auditor Attestation
-------------------
This annual report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation
by our registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit us to provide only
management's report in this annual report.

Changes in Internal Control over Financial Reporting
----------------------------------------------------
There have been no changes in our internal control over financial
reporting during the quarter ended December 31, 2009 that has
materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers
---------------------------------
The executive officers and directors are:

Name Age Position
Edward C. Dillon 73 CEO, Director
Nelson Stark 53 CFO, Director
Raymond Purdon 41 Chairman of the Board
Howard Neu 59 Director

Resumes

EDWARD C. DILLON. Mr. Dillon has been chief executive officer since
April 6, 2006 to present. Mr. Dillon has been chief financial officer
and executive vice president of the registrant since June 4, 2004 to
April 6, 2006. He was also responsible for shareholder relations and
investments. From January 2004 to February 4, 2006, Mr. Dillon served
as executive vice president for the registrant and he was also
responsible for shareholder relations and investments. From January
2004 to February 4, 2009, Mr. Dillon served as executive vice
president. From September 2004 to February 4, 2009, Mr. Dillon also
served as a director of the registrant. In April 2003, Mr. Dillon
accepted a position as Contract Manager Consultant to the Florida
Turnpike for Jacobs Engineering a Fortune 500 Company. April 1996 to
April 2002, Mr. Dillon retired to Florida for golf and relaxation. In
May 1968, Edward Dillon opened Bayshore Steel Construction in New
Jersey where he served as President and CEO until 1996. Bayshore Steel
contracted to erect office buildings, shopping centers and 20,000,000
sq. ft of warehouse space in central New Jersey. From 1957 to 1968 he
was employed as a Construction Supervisor for a family owned steel
business. Management is of the opinion that Mr. Dillon's strong
management and investor relations experience qualifies him to serve as
a director.

NELSON STARK. Mr. Stark has been chief financial officer from April 6,
2006 to present. Mr. Stark has been vice president of marketing and
operations of the registrant since June 4, 2004. Mr. Stark served as
vice president of marketing and operations of the registrant from
September 2003 until February 4, 2006. He has a Doctorate in
International Business from Nova Southeastern University in Ft.
Lauderdale, Florida. He received his Degree in May 1997. His areas of
specialization are strategic and international marketing. He started
his career with the Australian Trade Commission in Miami as their
Marketing Manager in September of 1987 until November 1988. He then
became the Marketing Manager for M. & J. Import-Export International in
New York from January 1989 until October 1997. He was appointed Center
Director for Embry-Riddle Aeronautical University's Ft. Lauderdale
Campus from November 1997 to October 1999. He was then appointed Vice
President of Marketing for Softrain U.S.A. from January 2000 until June

of 2003. Management is of the opinion that Mr. Stark's strong
educational background and marketing, management and administrative
experience qualifies him to serve as a director.

RAYMOND PURDON Mr. Purdon has over 17 years of experience in the
securities industry, including trading, investment banking, retail and
institutional sales. He is the founder and has been the principal of
Grandview Capital Partners since its launch in October 2006 and is
responsible for the firm's proprietary trading, due diligence and
investments. Ray oversees Pricester's merger and acquisition
committee. From July 2003 - October 2006, Mr. Purdon was a senior vice
president and branch manager of GunnAllen Financial. Mr. Purdon
graduated in 1991 from Seton Hall University with a Bachelor of Arts
degree. Management is of the opinion that Mr. Purdon's extensive
background in the securities industry qualifies him to serve as a
director.

HOWARD NEU. Since 1975, Mr. New has been a sole practitioner
specializing in Domain Defense Litigation, commercial litigation, and
appeals. He is also a Certified Public Accountant, has taught Taxation
of Deferred Compensation at the University of Miami School of Law as
well as courses in accounting and business law for the Miami Education
Consortium. He has also lectured for the Florida Bar Continuing Legal
Education program. He received his B.B.A. degree from the University
of Miami after attending the University of Florida for 3 years, and his
Juris Doctor degree from the University of Miami Law School. He was
elected to 3 terms as Mayor of the City of North Miami, Florida, has
served as Municipal Judge, Councilman, and has been elected President
of the North Dade Bar Association, The Greater North Miami Chamber of
Commerce, the Dade County League of Cities and various other State and
National organizations. In his career, he has done considerable SEC
work, successful Business Plans and Private Placement Memoranda. He is
married and has 3 daughters, four grandchildren and a 17 year old
stepson. Management is of the opinion that Mr. Neu's experience in
the legal and accounting fields qualifies him to serve as a director.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
To the registrant's knowledge, no director, officer or beneficial owner
of more than ten percent of any class of equity securities of the
registrant failed to file on a timely basis reports required by Section
16(a) of the Exchange Act during 2009.

Code of Ethics Policy
---------------------
We have not yet adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
Management is in the process of reviewing and adopting a code of ethics
and intends to complete the adoption of a code of ethics in the next
quarter.

Corporate Governance
--------------------
We have no change in any state law or other procedures by which
security holders may recommend nominees to our board of directors. In
addition to having no nominating committee for this purpose, we
currently have no specific audit committee and no audit committee
financial expert. Based on the fact that our current business affairs
are simple, any such committees are excessive and beyond the scope of
our business and needs.

ITEM 11. EXECUTIVE COMPENSATION.

The following table summarizes all compensation recorded by us in each
of the last two completed fiscal years for our principal executive
officer, our two most highly compensated other executive officers who
served as such at the end of the fiscal year and up to two additional
individuals for whom disclosure would have been provided if such
persons had been serving as executive officers at the end of the fiscal
year.

SUMMARY COMPENSATION TABLE
--------------------------
NONQUALIFIED
NON-EQUITY DEFERRED ALL
NAME AND STOCK OPTION INCENTIVE PLAN COMPENSATION OTHER
PRINCIPAL SALARY BONUS AWARDS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL
POSITION YEAR ($) ($) ($) ($) ($) ($) ($) ($)
----------- ---- ------- ------ ------ ------- -------------- ------------ ------------ -------

Edward C Dillon(1)
Chief Executive
Officer
2009 40,000 $ - $31,000 - $ - $ - $ - $71,000
2008 0 $ - $137,600 - $ - $ - $ - $137,600

Nelson Stark (2)
Chief Financial
Officer
2009 $7,500 $ - $1,550 $ - $ - $ - $ - $9,050
2008 $7,500 $ - $200 $ - $ - $ - $ - $7,700

(1) Mr. Dillon has served as our president and CEO since April 2006.
Mr. Dillon's fiscal 2009 compensation included stock awards of
1,000,000 shares of our common stock which were valued at $31,000.
Mr. Dillon's fiscal 2008 compensation included stock awards of
18,500,000 shares of our common stock which were valued at
$137,600.Accrued but unpaid compensation due to Mr. Dillon during
fiscal 2009 amounted to $40,000 which is included in the above table.

(2) Mr. Stark has served as our CFO since April 2006. In addition
to his salary, Mr. Stark's fiscal 2009 compensation included stock
awards of 50,000 shares of our common stock which were valued at
$1,550. In addition to his salary, Mr. Stark's fiscal 2008
compensation included stock awards of 100,000 shares of our common
stock which were valued at $200.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth the outstanding stock options to the
registrant's chief executive officer:

Option Awards
Outstanding Equity Awards at December 31, 2009

Equity Equity
Incentive Incentive
Plan Plan
Awards: Awards:
Number of Number of
Number of Securities Securities
Securities Underlying Underlying
Underlying Unexercised Unexercised Option Option
Unexercised Unearned Unearned Exercise Expiration
options Options Options in Price Date
Name (#) (#) (#) ($) ($)
---------------- ---------- ------------ -------- ------- -----------

Edward C. Dillon 1,000,000 $.40 One year after
Exec. Vice Pres. effective
registration
Outstanding Equity Awards at December 31, 2009
Equity
Incentive
Equity Plan Awards:
Incentive Market or
Market Value Plan Awards: Payout
of Shares Number of Value of
Number of or Units Unearned Unearned
Shares or of Shares Shares, Shares,
Units of or Units Units or Units or
Stock of Stock Other Rights Other Rights
that have that have that have that have
not vested not vested not vested not vested
Name (#) ($) (#) ($)
---------------- ---------- ------------ -------- ------------
Edward C. Dillon - - 1,000,000 $400,000
Exec. Vice Pres.

Employment Contracts and Termination of Employment and Change-in
Control Arrangements. The registrant entered into an employment
agreement on January 14, 2008 with Edward C. Dillon, its chief
executive officer which expires in January 2013. The employment
agreement calls for an issuance of 500,000 free trading shares of our
common stock. Additionally, based on this agreement, the registrant
shall issue 1,000,000 restricted shares of common stock during each
fiscal year of the term of this agreement.

The registrant entered into an employment agreement on January 14, 2008
with Raymond Purdon, an officer of the registrant which expires in
January 2013. The employment agreement calls for an issuance of
500,000 free trading shares of the registrant's common stock.

Additionally, based on this agreement, the registrant shall issue
1,000,000 restricted shares of common stock during each fiscal year of
the term of this agreement.

Directors' compensation. We do not have any standard arrangements by
which directors are compensated for any services provided as a
director. No cash has been paid to the directors in their capacity as
such.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

There are currently 153,491,906 common shares outstanding. The
following tabulates holdings of common shares and other securities of
the registrant by each person who, subject to the above, at March 31,
2010, holds of record or is known by management to own beneficially
more than 5.0% of the common shares, including any shares that may be
beneficially acquired within 60 days and, in addition, by all directors
and officers of the registrant individually and as a group.

Directors and Officers
Percentage of
Number & Class Outstanding
Name and Address of Shares Common Shares

Edward C. Dillon(1)(3) 21,232,500 13.83%
3850 Washington St. Apt. 910
Hollywood, FL 33021

Raymond Purdon(3) 18,250,000 11.89%
25 Fox Hill Drive
Little Silver, NJ 07739

Nelson Stark(2)(3) 244,000 0.16%
5130 SW 40th Avenue, Apt. 3B
Fort Lauderdale, FL 33314

Howard Neu(3) 2,496,000 1.63%
1152 N. University Drive #201
Pembroke Pines, FL 33024

(1)Mr. Dillon paid a weighted average of $.173 for the common shares
he currently owns.
(2)Nelson Stark received his common shares for services valued at
$.086 per common share.
(3)As of March 31, 2010, there are no shares that can be
beneficially acquired within 60 days.

Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.

Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable unity property laws.

All of the directors would be deemed to be promoters of the registrant.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

Director Independence

Our board of directors are not independent as such term is defined by a
national securities exchange or an inter-dealer quotation system.

During fiscal 2009, Edward Dillon, chief executive officer of Genesis
Electronics Group, Inc. advanced funds to us for working capital
purposes. The advances are non-interest bearing and are payable on
demand. At December 31, 2009 and 2008, we owed Mr. Dillon $40,485 and
$78,385, respectively. During fiscal 2009, Mr. Dillon advanced a total
of $63,900 to us. We paid Mr. Dillon a total of $26,000 during fiscal
2009.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following table sets forth the fees billed by our principal
independent accountants for each of our last two fiscal years for the
categories of services indicated.

Year Ended December 31,
Category 2009 2008
---- ----
Audit Fees (1) $ 12,750 $ 10,000
Audit Related Fees (2) 5,250 3,500
Tax Fees (3) - -
All Other Fees (4) - -
(1) Consists of fees billed for the audit of our annual financial
statements, review of our Form 10-K/10-KSB and services that are
normally provided by the accountant in connection with year end
statutory and regulatory filings or engagements.

(2) Consists of fees billed for the review of our quarterly financial
statements, review of our forms 10-Q/10-QSB and 8-K and services that
are normally provided by the accountant in connection with non year end
statutory and regulatory filings on engagements.

(3) Consists of professional services rendered by a company aligned
with our principal accountant for tax compliance, tax advice and tax
planning.

(4) The services provided by our accountants within this category
consisted of advice and other services relating to SEC matters,
registration statement review, accounting issues and client
conferences.

Our board of directors has adopted a procedure for pre-approval of all
fees charged by our independent auditors. Under the procedure, the
board approves the engagement letter with respect to audit, tax and
review services. Other fees are subject to pre-approval by the board,
or, in the period between meetings, by a designated member of board.
Any such approval by the designated member is disclosed to the entire
Board at the next meeting. The audit and tax fees paid to the auditors
with respect to fiscal year 2009 were pre-approved by the entire board
of Directors.

PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as a part of this report or are
incorporated by reference to previous filings, if so indicated:

Exhibit No. Description

31.1 Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive
officer
32.2 Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial
officer
32.1 Section 1350 Certification of Chief Executive Officer
32.2 Section 1350 Certification of Chief Financial Officer

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

Genesis Electronics Group, Inc.

By: /s/ Edward C. Dillon
---------------------------
April 6, 2011 Edward C. Dillon
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.

Signature Capacity Date

/s/Edward C. Dillon CEO/Director April 6, 2011
--------------------
Edward C. Dillon

/s/Nelson Stark CFO/Director April 6, 2011
-------------------- Principal Accounting Officer
Nelson Stark

/s/Raymond Purdon Director April 6, 2011
--------------------
Raymond Purdon

/s/Howard Neu Director April 6, 2011
---------------------
Howard Neu

Genesis Electronics Group, Inc. - FORM 10-K/A - April 6, 2011

Attached files

Genesis Electronics Group, Inc. Reports